An Apple supplier denies it is facing layoffs because not enough people are buying the new iPhone

Apple supplier Foxconn has denied The Wall Street Journal's report that employees are facing layoffs and the company is taking government subsidies to avoid this.

The report comes after another claiming that Apple is cutting iPhone production by 30%.

Over the past month or so, speculation has mounted that Apple will report disappointing sales of the iPhone 6s, its latest smartphone.

Every year, the latest iPhone has managed a sales increase. But rumours and signs from Apple's supply chain suggest that in 2016 — for the first time ever — we might see a year-on-year decline in sales of the iPhone.

In December, Dialog Conductor, which supplies chips for the iPhone, posted new guidance. Apple drives 75% of Dialog's revenue, and the company reduced fourth-quarter guidance to $390 million (£259 million) to $400 million (£260 million) from $430 million (£286 million) to $460 (£306 million). This suggests Apple is lowering its orders — a potential indicator the iPhone is going into decline.

On Tuesday, Nikkei reported that Apple was cutting production of the new handset by 30% in the quarter lasting January to March — something that would impact the business of companies in Apple's supply chain like Foxconn.

The Journal followed this up with its own report about Foxconn. The company is getting government subsidies — $12 million worth — to stave off layoffs because of a lack of demand, it alleged. Some Foxconn employees were apparently sent home for Chinese New Year early because there wasn't enough for them to do.

However, Foxconn claims that these subsidies were unrelated to current events, and that there has been no change in its workforce.

In a statement, it said that the subsidies are related to it providing "stable employment" in 2014, rather than current events. "The incentives were provided to Foxconn in recognition of our company’s contributions to maintaining our large workforce at our Zhengzhou facility in 2014; they were not incentives related to any other period, past or present."

Asked whether any employees were sent home early, as the Journal alleged, a company spokesperson answered: "No."

They said: "There have been no layoffs or material changes to the size of our workforce beyond the normal attrition or turnover rate.Foxconn will continue to maintain our significant workforce in China."

Foxconn declined to comment on the reports that Apple is reducing its orders.

Apple did not immediately respond to a request for comment.

Regardless of the truth of the rumours, investors are getting jittery. Apple stock closed down 2.5% on Tuesday. At $102.71 (£70.16) a share, it is approaching the $100 (£68) mark — a level it hasn't been below since October, USA Today reports.